- Highlights Attractive Investment Opportunity in Animal Health Industry
- Describes Zoetis' Competitive Advantage and Market Leadership Position
- Announces Full-Year 2015 Guidance of $1.61 to $1.68 for Adjusted Diluted Earnings Per Share1 and Longer Term Financial Goals Through 2017
Zoetis Inc. (NYSE:ZTS), the world’s leading animal health
company, today hosted its first-ever Investor Day, discussing with
investors and analysts the company’s leadership position in the animal
health industry and the strategy and initiatives underway that will
drive growth and create value for shareholders. The company also
provided full-year 2015 financial guidance and outlined its longer term
financial goals through 2017.
“Zoetis has become the world leader in the $23 billion market for animal
health medicines and vaccines based on our unique combination of
capabilities, our diverse portfolio of more than 300 product lines, our
global presence in 120 countries and critical investments that we have
made in our operations,” said Zoetis Chief Executive Officer Juan Ramón
Alaix. “Our financial strength, strong performance as a fully
independent company, and prospects for growth as the market leader
position Zoetis to continue delivering sustained value to shareholders.”
“Steady and growing demand for meat and milk proteins and pets for
companionship represent an attractive market opportunity for Zoetis to
help keep animals healthy and productive. Our singular focus on animal
health makes a difference in how we serve our customers, create
innovative new products for their needs, and deliver a reliable,
high-quality supply of medicines and vaccines, putting us in a strong
position to continue growing in line with or faster than the market.”
Combining Three Interconnected Capabilities for Market Success
During the meeting, Alaix and the Zoetis executive team provided an
in-depth review of the Zoetis business model and the unique
characteristics that have established the company as the world leader in
animal health, growing revenue faster than the market for the last three
years (5.1% for Zoetis2 vs. 4.6% for the Animal Health
Market).
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The company’s four regional presidents – Clint Lewis, Joyce Lee, Dr.
Stefan Weiskopf and Dr. Alejandro Bernal – each described how they are
gaining market share through the company’s direct selling model,
with approximately 3,500 customer-facing colleagues on the ground in
70 countries. The executives emphasized the unique growth drivers and
distinct needs in each of the regions, which are addressed with
local-market approaches and strategies.
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Dr. Catherine Knupp, Executive Vice President and President of
Research & Development (R&D), described the company’s approach to R&D
and building enduring brands, including Zoetis’ focus on customer
needs, speed to market, its ability to leverage its global
capabilities, and drivers of future revenue growth. Knupp highlighted
examples of the company’s innovation with its recent dermatology
breakthrough for dogs, APOQUEL®, and its continuous
enhancement of the ceftiofur franchise over the last 25 years. Knupp
also outlined the company’s areas of focus for future livestock and
companion animal product innovations.
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Kristin Peck, Executive Vice President and Group President, discussed
the company’s Manufacturing and Supply Network and how it enables
Zoetis to deliver high-quality, reliable supply at competitive
costs through a mix of internal and external supply sources. Peck
described the company’s ongoing emphasis on productivity improvements
and the high value customers place on Zoetis’ reliable, high-quality
supply, its record of maintaining its manufacturing excellence, and
its ability to integrate acquisitions seamlessly. She also outlined
the company’s plan to further optimize its network for growth and
gross margin improvement.
Future Outlook and Commitment to Generating Value for Shareholders
The company concluded its event with a discussion of its financial
dynamics and expectations over a three-year horizon, including
announcing guidance for full-year 2015.
“Zoetis participates in an industry where revenues are expected to grow
in the mid-single digits – 5% to 6% on an operational basis3
– over the long-term,” said Zoetis Executive Vice President and Chief
Financial Officer Paul Herendeen. “And, we expect to grow our revenue in
line with or faster than the market based on the combination of our
industry-leading field-based resources, R&D and high quality supply.
“Below the revenue line, we expect to generate modest improvements in
gross margin in the near term before accelerating after 2017. After
2015, we expect to keep our operating expense growth in the range of the
inflation rate,” said Herendeen. “Considering all of these factors, we
believe Zoetis is a company that can grow adjusted net income1
in the low, double-digits over the long term.”
In his remarks, Herendeen indicated the company could grow revenue in
the range of 5% to 7% on an operational basis3 for 2016 and
2017, and grow adjusted net income in the range of 11% to 16% on an
operational basis3 for 2016 and 2017.
For full-year 2015, the company offered the following financial guidance:
-
Revenue of between $4.850 billion to $4.950 billion (6.5% to 8.5%
growth on an operational basis3)
-
Reported diluted EPS for the full year of between $1.36 to $1.43 per
share
-
Adjusted diluted EPS1 for the full year between $1.61 to
$1.68 per share
Additional guidance on other items such as expenses and effective tax
rate is included in the financial tables accompanying this press release
and on the company’s website.
Herendeen also outlined the company’s priorities for capital allocation
at the meeting:
-
The company will aggressively manage its operating costs to drive
revenue and support a complex growing business.
-
It will use capital for value-creating business development activities
that add to or complement its existing business base such as the
purchase of assets of Abbott Animal Health, which the company
announced yesterday, to generate additional shareholder value.
-
It will return capital to shareholders through continued dividend
payments and the utilization of a $500 million share repurchase
authorization, which was announced separately today.
A full replay of the company’s webcast and copies of today’s
presentations will be made available on http://www.zoetis.com/events-and-presentations.
About Zoetis
Zoetis
(zô-EH-tis) is the leading animal health company, dedicated to
supporting its customers and their businesses. Building on more than 60
years of experience in animal health, Zoetis discovers, develops,
manufactures and markets veterinary vaccines and medicines, complemented
by diagnostic products and genetic tests and supported by a range of
services. In 2013, the company generated annual revenue of $4.6 billion.
With approximately 9,800 employees worldwide at the beginning of 2014,
Zoetis has a local presence in approximately 70 countries, including 27
manufacturing facilities in 10 countries. Its products serve
veterinarians, livestock producers and people who raise and care for
farm and companion animals in 120 countries. For more information, visit www.zoetis.com.
1Adjusted net income and adjusted diluted earnings
per share (non-GAAP financial measures) are defined as reported net
income attributable to Zoetis and reported diluted earnings per share,
excluding purchase accounting adjustments, acquisition-related costs and
certain significant items.
2Sales of animal health products (as defined by
Vetnosis), which excludes Poultry Devices, Agribusiness, Nutritional
Feed Additives. Company sales prior to February 1, 2013 refer to
Pfizer Animal Health. Company sales from February 1, 2013 refer to
Zoetis.
3Operational growth is defined as growth excluding
the impact of foreign exchange.
DISCLOSURE NOTICES
Forward-Looking Statements: This
press release contains forward-looking statements, which reflect the
current views of Zoetis with respect to business plans or prospects,
future operating or financial performance, expectations regarding
products, future use of cash and dividend payments, and other future
events. These statements are not guarantees of future performance or
actions. Forward-looking statements are subject to risks and
uncertainties. If one or more of these risks or uncertainties
materialize, or if management's underlying assumptions prove to be
incorrect, actual results may differ materially from those contemplated
by a forward-looking statement. Forward-looking statements speak only as
of the date on which they are made. Zoetis expressly disclaims any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. A
further list and description of risks, uncertainties and other matters
can be found in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2013, including in the sections thereof captioned
“Forward-Looking Information and Factors That May Affect Future Results”
and “Item 1A. Risk Factors,” in our Quarterly Reports on Form 10-Q and
in our Current Reports on Form 8-K. These filings and subsequent filings
are available online at www.sec.gov,
www.zoetis.com,
or on request from Zoetis.
|
ZOETIS INC.
2015 GUIDANCE
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|
|
|
Selected Line Items
|
|
|
Revenue
|
|
$4,850 to $4,950 million
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Operational growth1
|
|
6.5% to 8.5%
|
Adjusted cost of sales as a percentage of revenue2
|
|
Approximately 35.5%
|
Adjusted SG&A expenses2
|
|
$1,470 to $1,520 million
|
Adjusted R&D expenses2
|
|
$385 to $405 million
|
Adjusted interest expense and other (income)/deductions2
|
|
Approximately $110 million
|
Effective tax rate on adjusted income2
|
|
Approximately 29%
|
Adjusted diluted EPS2
|
|
$1.61 to $1.68
|
Adjusted net income2
|
|
$810 million to $845 million
|
Operational growth1
|
|
12% to 16%
|
Certain significant items3 and acquisition-related costs
|
|
$130 to $150 million
|
Reported diluted EPS
|
|
$1.36 to $1.43
|
|
|
|
Full-year 2015 guidance reflects current exchange rates and other
factors. This excludes any impact of the recently announced acquisition
of assets of Abbott Animal Health.
A reconciliation of 2015 adjusted net income and adjusted diluted EPS
guidance to 2015 reported net income attributable to Zoetis and reported
diluted EPS attributable to Zoetis common shareholders guidance follows:
|
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Full-Year 2015 Guidance
|
(millions of dollars, except per share amounts)
|
|
Net Income
|
|
Diluted EPS
|
Adjusted net income/diluted EPS2 guidance
|
|
~$810 - $845
|
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~$1.61 - $1.68
|
Purchase accounting adjustments
|
|
~(30)
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|
~(0.06)
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Certain significant items3 and acquisition-related costs
|
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~(90 - 105)
|
|
~(0.18 - 0.21)
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Reported net income attributable to Zoetis/diluted EPS guidance
|
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~$685 - $720
|
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~$1.36 - $1.43
|
1Growth excluding the impact of foreign exchange.
2Adjusted net income and its components and
adjusted diluted EPS are defined as reported U.S. generally accepted
accounting principles (GAAP) net income and its components and reported
diluted EPS excluding purchase accounting adjustments,
acquisition-related costs and certain significant items. Adjusted cost
of sales, adjusted selling, general and administrative (SG&A) expenses,
adjusted research and development (R&D) expenses, adjusted interest
expense and adjusted other (income)/deductions are income statement line
items prepared on the same basis, and, therefore, components of the
overall adjusted income measure. Despite the importance of these
measures to management in goal setting and performance measurement,
adjusted net income and its components and adjusted diluted EPS are
non-GAAP financial measures that have no standardized meaning prescribed
by U.S. GAAP and, therefore, have limits in their usefulness to
investors. Because of the non-standardized definitions, adjusted net
income and its components and adjusted diluted EPS (unlike U.S. GAAP net
income and its components and diluted EPS) may not be comparable to the
calculation of similar measures of other companies. Adjusted net income
and its components and adjusted diluted EPS are presented solely to
permit investors to more fully understand how management assesses
performance. Adjusted net income and its components and adjusted diluted
EPS are not, and should not be viewed as, substitutes for U.S. GAAP net
income and its components and diluted EPS.
3Primarily includes certain nonrecurring costs
related to becoming an independent public company, such as new branding
(including changes to the manufacturing process for required new
packaging), the creation of standalone systems and infrastructure, site
separation, certain legal registration and patent assignment costs, as
well as other charges.
Zoetis Inc.
Media:
Bill Price
1-973-443-2742 (o)
1-908-251-1972 (m)
william.price@zoetis.com
or
Elinore White
1-973-443-2835 (o)
1-347-331-9042 (m)
elinore.y.white@zoetis.com
or
Investor:
John O'Connor
1-973-822-7088 (o)
john.oconnor@zoetis.com